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Convergence: Radio receptionmay be fading

June 2003

Convergence: Radio reception may be fading

Lucia Moses
June 23, 2003

In theory, owning a radio station in the same market makes a lot of sense for newspapers, especially for ones in small- to medium-sized markets where there's no logical TV station to buy. Radio can cross-sell with and promote the newspapers over the airwaves, and newspapers can provide news content to staff-poor radio stations. John T. Cribb, principal broker at Cribb & Associates, Bozeman, Mont., predicts that because of radio's popularity among young and Hispanic audiences, for example, matchups between newspapers and radio will be the "hot new deal." 

Frank H. Shepherd, president and CEO of 21st Century Newspapers Inc. in Pontiac, Mich., will be exploring all broadcast opportunities in the Detroit area, where he owns a string of suburban papers. "I think it's more of a defensive move to protect our market share," he says. "Anytime you own multiple media, you can shake out duplicative expenses." The ability to cross-promote, he adds, is "a huge plus."

But are newspaper/radio deals the Next Big Thing -- or just a broker's fantasy?

When all is said and done, despite the industry's lobbying for dropping the ban, few papers will likely take advantage. Why? Some of the same reasons that newspapers won't be buying TV stations en masse apply. Most publishers lack operating experience in radio, and station prices are likely to scare off would-be buyers.
Major radio players already have scooped up many of the market-leader stations. Since the signing of the Telecommunications Act of 1996, the number of owners has declined 34%, while the two biggest groups, Clear Channel Communications and Cumulus Broadcasting Inc., went from owning less than 65 stations apiece to about 1,200 and 250, respectively, according to an FCC study.

"Given the amount of consolidation that's taken place, there's not an abundance of properties available," says Thomas J. Buono, CEO of BIAfn, a Chantilly, Va.-based media investment bank and consultancy. "If you can find a property, there's a fair amount of competition for it." Mike Blinder, president of the Blinder Group, a Tampa, Fla.-based multimedia sales consultancy, similarly says that as much as he likes the idea of newspapers being able to cross-sell with radio, "I don't see a lot of leftovers in the markets I'm in."

Scott A. Stawski, client executive with the media practice of Jersey City, N.J.-based Inforte, says newspapers are too late to the game. "The difficulty in radio is that companies like Clear Channel ... have proven that what's most beneficial is to own four or five radio stations in a given market, and these [new] cross-ownership rules really do not allow newspapers to do that."

As with TV, the papers looking at radio tend to be those who already own it and appreciate the basic differences between the media. While both are predominately driven by local advertising, they serve different kinds of advertisers and readers, says James C. Goss, an analyst with Barrington Research in Chicago.

Ken Marlin, managing partner at New York investment bank Marlin & Associates, says, "Newspapers are fundamentally about news," while radio makes money "by playing music, which has got nothing to do with the business of the newspaper. If you're going to buy a business, you better understand the business."

Copyright 2003 The Editor & Publisher Co., Inc. 
Editor & Publisher Magazine

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